Suspicious Activity Reporting Regulations Extended to Casinos and Card Clubs

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FOR IMMEDIATE RELEASE
May 18, 1998

The nation’s casinos and card clubs will be required to report suspicious activity under a proposed rule issued today by the Department of the Treasury’s Financial Crimes Enforcement Network. Suspicious activity involves financial transactions which a casino or card club suspects are linked to illegal activity or have no legitimate purpose. The proposal is issued under the authority of the Bank Secrecy Act (BSA) -- Treasury’s key tool in the fight against money laundering, financial fraud and tax evasion.

The proposed rule will require state-licensed and tribal casinos and card clubs with more than $1 million in gross annual gaming revenue to report suspicious activity to FinCEN involving transactions of $3,000 or more. The amount of money legally wagered in casinos exceeded $480 billion in 1996. In addition, nearly $10 billion was wagered in card clubs that same year, the latest data available.

"The explosive growth of gaming in the United States in the last decade increases the potential for abuse of casinos by money launderers and tax evaders," said Raymond W. Kelly, Treasury Under Secretary for Enforcement. "With large volumes of currency being wagered throughout the United States, the fast-paced environment of casino gaming can create an especially effective cover for money laundering."

Since 1985, Treasury, through its BSA regulations, has required recordkeeping and reporting of large currency transactions occurring at state-licensed casinos with gross annual gaming revenue in excess of $1 million. Tribal casinos came under Treasury’s BSA regulatory purview on August 1, 1996 and card clubs will be required to report large currency transactions beginning on August 1, 1998. These reports preserve a financial trail for law enforcement and have a high degree of usefulness in criminal, tax and regulatory matters, investigations or proceedings.

Since April 1, 1996 the nation’s banks, thrift institutions and credit unions have been subject to a suspicious activity reporting requirement through the filing of a Suspicious Activity Report (SAR). Since that time, more than 155,000 SARs have been filed for use by law enforcement and bank regulators in their investigations.

"In proposing this rule, Treasury is stating again its judgment that reporting of suspicious activity in a timely fashion is a key component of the flexible and cost-effective compliance system required to prevent the use of the nation’s financial service providers for illegal purposes," said William F. Baity, Acting Director of FinCEN.

Under the proposal, casinos must report transactions which they suspect:

involve funds derived from illegal activity or used for illegal purposes;
are intended, whether through structuring or other means, to evade the requirements of the BSA; and
serve no apparent lawful purpose, and for which the casino or card club knows of no legitimate explanation.

Nevada’s state regulatory system has required that Nevada casinos send reports of suspicious activity to FinCEN since October 1, 1997. This requirement was introduced after close consultation with that state’s casino regulators and gaming industry. FinCEN closely examined the experience of Nevada casinos in drafting the proposal published today. Under a 1985 agreement between Nevada and Treasury, Nevada’s casinos are subject to state imposed anti-money laundering rules that closely parallel federal requirements.

FinCEN plans to hold at least three regional meetings to provide an opportunity for the industry to comment on the proposal. The meetings are tentatively scheduled to occur in New Orleans on July 14, Chicago on July 23 and in the Phoenix/Scottsdale area on August 6.

FinCEN has also been working with representatives from the gaming industry on a guidance document for casinos to assist in identifying suspicious activity. The document lists examples of how a casino’s financial services might be used for illicit purposes.

In addition to this proposal and the suspicious activity reporting requirement already in place for banks, Treasury has also proposed to extend this reporting requirement to money transmitters and issuers and sellers of money orders and traveler’s checks. A similar proposal is being drafted for securities broker dealers and is expected to be published within a few months.

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